Weekly Mortgage Rate Update- 04/02/2024

What do you get when you have inflation above target and strong economic indicators?  Not lower interest rates unfortunately.

PCE was the main event last week.  It showed inflation increased for the month of February at a pace of 0.3%, but this is less than the increase for the prior month. January was revised even higher to a monthly pace of 0.5% from 0.4% previously reported. Personal income came in slightly lower than expectations at 0.3% for the month, but personal spending rose 4 times faster than expected at 0.8%.  Overall, the report was not great news, but the slower pace of inflation increases month over month was a welcome reading and a trend in this direction is what we want to see.  

Powell spoke in at a conference Friday after the PCE report was released:

"The report that came out this morning is pretty much in line with our expectations. Core PCE is at 2.8 The economy is strong, we see very strong growth. We had growth (GDP) for last year over 3%," Powell said. "We don't need to be in a hurry to cut. It means we can wait and become more confident that inflation is coming down to 2% on a sustainable basis."

On the future outlook for rates he said- "My own expectation is I don't think rates will go back down to the very, very low levels they were at before the pandemic, but where they will settle out it's hard to say," Powell explained. "This economy doesn't feel like it's suffering." 

Monday, ISM Manufacturing which is a national measure of activity for the manufacturing sector for the first time in 16 months showed expansion and surprised higher. This report had shown the sector in retraction since 2022.  In this report the employment index increased, as well as the costs input (both inflationary).  Rates rose after this report hit and markets digested the inflation outlook, strong economic reading, as well as Powell’s comments above. Now our June rate cut hangs in the balance. With 2 more months to go before that meeting, anything is possible still.  

Overall March saw mortgage rates stay in a pretty narrow range.  April is not off to a great start now back to the highest rates of 2024 to date.  However, any new information that comes up could change that. 

It’s the first of the month so we get all our employment data for March culminating with Friday non-farm payrolls.  

Loan Type	Conventional 30 year	Conventional 15 year	FHA 30 year	VA 30 Year
Interest rate	6.875%	6.00%	6.25%	6.25%
APR	7.037%*	6.231%*	6.894%**	6.311%***

LICENSED BY THE CALIFORNIA DEPARTMENT OF REAL ESTATE LICENSE A division of TYKY (DRE #01919683) (NMLS LICENSE #257773)

RATES ARE CURRENT AS OF 04-02-2024.  SUBJECT TO BORROWER APPROVAL, FICO SCORE, LTV AND PROPERTY TYPE.conv

*APR IS BASED ON ESTIMATED FINANCE CHARGES OF $6935

**APR IS BASED ON ESTIMATED FINANCE CHARGS OF $10,969 THIS INCLUDES FHA MORTGAGE INSURA

NCE PREMIUM

***APR BASED ON ESTIMATED FINANCE CHARGES OF $8343

FEES INCLUDE 1% POINTS, NO Loan Origination Fee ,  $1095 PROCESSING AND $0 UNDERWRITING FEE        

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.